Ceccone v. Carroll Homes Servs., LLC
| Decision Date | 28 July 2017 |
| Docket Number | No. 85,85 |
| Parties | RICHARD AND DAPHNE CECCONE v. CARROLL HOMES SERVICES, LLC |
| Court | Court of Special Appeals of Maryland |
Limitations - Contracts - Shortening Statute of Limitations by Contract. With certain exceptions specified by the General Assembly, the statutory period of limitations for tort and contract claims in Maryland is three years. Maryland Code, Courts & Judicial Proceedings, §5-101. A provision of a contract that purports to shorten this period of limitations will be enforced in Maryland only if (1) there is no controlling statute to the contrary; (2) the provision is not the result of fraud, duress, misrepresentation, or the like; and (3) the provision is reasonable. In assessing the reasonableness of such a provision, the court should make an explicit determination whether the provision is reasonable, considering a variety of factors, including the subject matter of the agreement, the degree to which the provision shortens the applicable period of limitations, the relative bargaining position of the parties, and whether the shortened period of limitations is one-sided or applies equally to the parties to the agreement.
Circuit Court for Anne Arundel County
Barbera, C.J. Greene Adkins McDonald Watts Hotten Getty, JJ.
Opinion by McDonald, J.
In the court system, a potential plaintiff has an interest in having sufficient time to investigate and assert a claim. A potential defendant has an interest in repose and finality as to whether it will be necessary to mount a defense. The public has an interest in the efficient use of public resources - what, in this context, is sometimes called judicial economy. The Legislature, as the primary policy-making branch of government, weighs those competing interests and establishes statutory limitations periods for bringing claims in court.
Maryland law, nevertheless, allows parties, in some circumstances, to further restrict access to the courts by shortening limitations periods by contract. When will the courts recognize such clauses as superseding the legislative policy determination as to an appropriate period of limitations? Given the wide variety of contracts, the creativity of lawyers in devising contract clauses, and the disparity in bargaining power that sometimes exists, there is no simple answer.
This case concerns the standard "General Terms and Conditions" of a residential furnace maintenance agreement offered by Respondent Carroll Home Services, LLC ("CHS").1 One of those terms reduced the period for a consumer to bring a tort or contract claim against CHS from the statutory three years to one year, although it did not limit the time period for CHS to make a claim against a consumer. Petitioners Richard and DaphneCeccone, who had entered into a maintenance agreement with CHS, asserted tort and contract claims against CHS for damage to their residence that they attributed to the company. They filed their complaint well before the expiration of three years, but arguably more than a year after their claims accrued. The Circuit Court for Anne Arundel County dismissed their complaint on the basis of the shortened limitations provision in the agreement.
We adopt the approach previously articulated by the Court of Special Appeals and hold that contractually-shortened limitations periods, like the one at issue here, are valid only if (1) there is no statute to the contrary; (2) the provision is not the result of fraud, duress, misrepresentation, or the like; and (3) the provision is reasonable in light of all pertinent circumstances. Because the Circuit Court did not consider potential contract defenses or make an explicit finding on reasonableness, we remand the case to that court so that it may decide how those factors affect the validity of the limitations-shortening provision in the first instance.
At the time of the events underlying this case, the Ceccones heated their home in Anne Arundel County by means of an oil-fueled furnace.2 They entered into a maintenanceagreement for that furnace with CHS. CHS offered the maintenance agreement - titled "Carroll Home Services Ultra Oil Plan" - to customers to whom it supplied oil.
Under the maintenance agreement, CHS agreed to provide 24-hour-a-day service for no-heat emergencies, to repair specified boiler parts if they became defective due to normal wear and tear, and to conduct a yearly "tune-up" of the heating system. The customer agreed to properly vent the heating system, to maintain clean air filters, and to replace batteries as needed, among other things.3
The "General Terms and Conditions" of the agreement appear in 18 numbered paragraphs on the back of the pre-printed form that comprises the agreement. Among the items set forth in those paragraphs are the duration of the agreement, procedures for cancellation, conditions for coverage under the agreement, exclusions from coverage, disclaimers of warranties, notices of costs a customer will incur for late payment or non-payment, and limitations of CHS's liability, among other things. Pertinent to this case, Paragraphs 9 and 10 provide as follows4:
(capitalized emphasis in original; italicized emphasis added). As is evident, Paragraph 10 provides that any actions brought by the Buyer - i.e., the Ceccones - including tort or contract claims must be brought within one year of accrual of the cause of action. This provision was apparently intended to shorten the three-year period of limitations that wouldotherwise apply to such claims pursuant to Maryland Code, Courts & Judicial Proceedings Article ("CJ"), §5-101. There is no corresponding provision that shortens the period of limitations for CHS or that requires it to bring a claim within one year. Rather, Paragraph 9 purported to permit CHS to delay enforcing its rights under the agreement "without losing any of [its] rights under the agreement."
During April 2014, there was an incident involving the Ceccones' furnace that caused some damage to their home. For purposes of this opinion, the details of that incident and the damages are not important. It suffices to say that the Ceccones suspected that faulty maintenance by CHS was responsible. According to the Ceccones, they consulted with an engineer and insurance adjuster, as well as another furnace maintenance company, all of which confirmed their belief that CHS was at fault. After conducting that investigation, they asked CHS to pay the cost of remedying the damage. Some negotiations ensued during 2015, but the parties ultimately did not agree on a resolution.
On December 24, 2015, the Ceccones filed a pro se small claims action in the District Court of Maryland sitting in Anne Arundel County. See CJ §4-405; Maryland Rule 3-701. The Ceccones sought damages in the amount of $3,694.39, as well as costs. The complaint alleged that CHS had improperly maintained their heating system, and that this improper maintenance was both fraudulent and a breach of the parties' contract. CHS filed a Notice of Intend to Defend on January 19, 2016. On January 29, 2016, the Cecconesfiled an amended complaint that added documentation concerning the requested damages and increased the amount requested by about $70. The amended complaint also added an allegation that CHS had not complied with certain licensing requirements.5
On March 17, 2016, the District Court dismissed the case, apparently on the basis of the shortened limitations period set forth in the maintenance agreement, and entered judgment in favor of CHS. The Ceccones then pursued a de novo appeal in the Circuit Court for Anne Arundel County. See CJ §12-401(f) (); Maryland Rule 7-102.
The Circuit Court conducted a brief hearing on the matter on July 8, 2016. At the outset, counsel for CHS noted that CHS denied liability, but advised the...
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